What is a good profit margin for a restaurant?
Those rising costs and shifting expectations have had a direct impact on the benchmark for what counts as a “good” profit margin in hospitality. Historically, restaurants aimed for an industry average of 3% to 5%, but today, those numbers are becoming harder and harder to achieve.
In reality, what’s considered good really depends on the type of restaurant you’re running. Smaller independents might feel the squeeze with tighter margins, while larger chains can often push higher thanks to economies of scale. The real question isn’t whether you’re hitting industry averages, it’s how well you’re maximising the opportunities within your own business.
Focusing on key areas like pricing, staffing efficiency, and waste reduction can allow you to work towards profit goals that reflect your own circumstances. Because the reality is, a “good” profit margin will be different for everyone. When every part of your business is working as efficiently as possible, you’re better able to measure what “good” looks like for you.
Why looking at profit margins is important for restaurants
When we talk about running a profitable restaurant, it’s tempting to focus on increasing sales and revenue. After all, a busy dining room feels like the ultimate marker of success. But without healthy profit margins, even a packed house can leave you in the red.
Profit margins give you a true picture of how efficiently your restaurant is running. They highlight where you’re spending too much, where you could be saving, and whether you’re pricing your menu effectively. For smaller restaurants, margins often reflect the daily battle to balance rising costs with limited resources. For larger chains, they can show whether scaling up is driving real returns or just adding complexity.
Looking at your margins is also key to long-term success. It’s not just about keeping the doors open today - it’s about future-proofing your business. By keeping a close eye on what’s coming in and going out, you’re better equipped to adapt to challenges and seize opportunities as they arise.
7 strategies to increase your profit margins in 2025
Boosting profit margins in hospitality has always been a challenge, but in 2025 it’s about working smarter, not harder. The basics (like reducing waste or negotiating with suppliers) are still important, but they’re only part of the story. If you want to stay ahead, you’ll need to embrace fresh strategies that deliver a real impact.
1- Optimise your menu design
Your menu isn’t just a list of dishes, it’s one of your most powerful tools for driving profit. Likewise, menu engineering isn’t just about highlighting your most popular dishes; it’s about steering customers toward your most profitable ones.
By analysing which items deliver the best margins and which don’t pull their weight, you can start designing a menu that does the heavy lifting for you. Think about strategic placement (like featuring high-margin dishes in key spots), using tempting descriptions, and even tweaking portion sizes to maximise value. Optimising your menu not only drives sales but also helps you to make sure those sales are as profitable as possible.
2- Make the most of seasonal trends
Seasonal menus aren’t just great for keeping your offering fresh, they’re also a clever way to manage costs. By focusing on ingredients that are at their peak (and usually cheaper) during specific times of the year, you can create dishes that create a buzz, get your guests excited, and protect your bottom line by increasing sales while keeping costs down.
Seasonal specials can help create a sense of urgency, making your customers want to visit more often to try those ‘limited edition’ dishes before they’re gone. If you pair this with a creative themed event or a special promotion, you’ve got a recipe for happy customers, a higher average spend, and healthier profit margins.
3- Embrace the psychology of pricing
Pricing strategy isn’t just about covering costs (or even making a profit!) It’s about influencing how your customers feel about your offering. Even small tweaks, like rounding prices to .95 instead of .99 or removing currency symbols, can make a surprising difference to how people perceive the value of what you’re offering. You could also think about including premium options on your menu (like a “Chef’s Special”) which can gently encourage your customers to spend a little more, boosting average spend.
4- Give your customers a fabulous experience
We’ve already mentioned shifting customer expectations, and it’s really important to recognise that diners are looking for more than a delicious meal these days. When they choose to eat out, they want an experience, and they’ll choose a restaurant that they trust to deliver that. Prioritising the customer experience doesn’t just bring customers back, it gets them talking about you to friends, family, and Facebook acquaintances.
Focus on the little things like friendly service, thoughtful table touches, or even personalised menu suggestions. And if you don’t already offer one, you may want to think about introducing a loyalty program; this can be a powerful way to encourage repeat visits and build stronger relationships with your regulars. Every happy customer is an investment in your long-term success.
5- Review your staffing strategy
We’ve had so many conversations with customers who tell us that the single biggest challenge to balancing costs is getting their staffing levels right. It’s all about finding the sweet spot between having enough staff to deliver excellent service, and avoiding unnecessary costs.
Cross-training your team can make a huge difference because it means staff can be more adaptable, helping out with different roles during busy periods. Meanwhile, smarter scheduling - using sales data and customer trends - helps you avoid overstaffing on quiet days or being short-handed when the rush hits. It’s not about doing more with less; it’s about working smarter to get the most from your team, while maintaining the highest possible levels of service.
6- Make the most of your data
Your restaurant generates a goldmine of data every day and it’s really important to make sure you’re capturing it effectively, because tapping into it could be the key to unlocking hidden profits. Are certain dishes always being sent back half-eaten? Is any part of the menu consistently underperforming? Are your busiest times costing you more in overtime than they’re bringing in? When you track trends like table turnover, sales by menu item, and inventory levels, you can spot opportunities to save money, or boost revenue. This is where a good ePOS system can really help - it takes the guesswork out of decision-making by giving you instant insights into what’s working and what’s not. With clear, actionable data, you’re in a stronger position to optimise your business.
7- Focus on sustainability
Sustainability isn’t just about meeting certain obligations, or ticking boxes; it’s a practical way to reduce your costs, and it also allows you to connect with diners who care about the planet. More and more customers are choosing restaurants that share their values, with studies showing that diners are willing to pay more for eco-friendly options.
You don’t have to make huge, sweeping changes to become more sustainable; steps like switching to energy-efficient appliances or finding ways to reduce food waste are a great place to start. Maybe think about partnering with local suppliers to help cut transportation costs while supporting your local community. And repurposing leftovers into daily specials can reduce waste while giving your customers something new to try. Sustainability is about progress, not perfection, and even small steps can add up to big savings.
How technology can help unlock higher profits
Making the right decisions at the right time can be the difference between breaking even and turning a profit, and when it comes to doing that effectively, the right technology can make a huge difference. It can help you take control, cut unnecessary costs, and make smarter choices to protect your margins. Here are a few options that might be worth exploring.
ePOS systems
Your ePOS system isn’t just for taking payments, it’s an important tool for capturing all that important data about your business. A good ePOS system for hospitality gives you the ability to track menu sales, table turnover and waste, and it gives you a clearer picture of where your profits are being eroded. Whether it’s highlighting dishes with high sales but low margins, or spotting slow periods that need a push, your ePOS helps you act quickly to protect your profits.
Staff scheduling software
Labour costs can eat into your margins faster than you think, so it can be a good idea to look into solutions to optimise staffing levels if you want to make a profit. Tools like Rotaready use your sales data to predict demand, so you can schedule just the right number of staff for each shift. It helps you avoid overstaffing during quiet times and makes sure you’re fully covered when things get busy. The result? Lower costs and happy customers, without the guesswork.
Menu engineering
Not every dish is profitable, and menu engineering software shows you exactly where the opportunities are. It can break down the performance of every menu item, so you can spotlight your stars, tweak underperformers, or adjust prices to boost profitability. These small changes can make a big difference to your bottom line without compromising the customer experience.
Purchase-to-pay software
Keeping track of your suppliers and stock is a time consuming job, but it can have a big impact on profitability, and purchase-to-pay software makes it simple. It gives you visibility over your spending, helps you avoid over-ordering, and keeps waste to a minimum. By staying on top of your inventory, you can keep costs down and ensure every penny spent is working hard for your business.
The right technology doesn’t just streamline your operations, it helps you make better decisions, save money, and keep your profits on track. Whether it’s scheduling smarter shifts, engineering a winning menu, or cutting waste, these tools give you the insights and control you need to thrive.
Ready to take control of your profit margins?
In this article, we’ve explored the challenges for hospitality operators when it comes to maintaining healthy profit margins, and we’ve talked about why it’s more important than ever to rethink how your restaurant operates. From optimising your menu and smarter pricing strategies, to leveraging technology for better data insights and cost control, we’ve shared some practical ways to help you boost profitability.
The key takeaway is that protecting your bottom line isn’t necessarily about making drastic changes; it can be about working smarter and focusing on the areas where you can make the biggest impact. Small, targeted improvements in how you manage costs, streamline operations, and deliver exceptional customer experiences can lead to fantastic results.
If you’re ready to turn these ideas into action, we’d love to help. At Access Hospitality, we work with restaurants across the UK to simplify operations, improve efficiency, and unlock higher profits. Whether you’re looking for a hospitality ePOS system, menu engineering tools, or smarter scheduling software, we’ve got the expertise and solutions to help.
Get in touch with our team today to find out how we can help your business thrive in 2025 and beyond.